Mar. 31, 2023
To whom it may concern, I’m a European Investor in the US-market. Since I started to invest in the US, I saw a lot of unfair market practices, way too low fines for broken rules and no signs of improvement. This rule is an important step to better markets. I fully support the rule, please implement it as soon as possible! But every rule the SEC passes is only as good as the enforcement that backs it. I want to see higher fines that actually serve as a significant deterrent. Also some broker-dealers should lose their licenses instead of receiving fines that amount to nothing more than a cost of doing business - a cost that is often outweighed by the ill-gotten gains obtained through “honest mistakes”. I see the proposed Regulation Best Execution as a necessary step in protecting household investors and promoting fair and efficient markets by ensuring that household investors are receiving the best possible execution for their trades. The proposed rule would provide a more detailed and comprehensive standard for broker-dealers to follow, resulting in consistently robust best execution practices. The following statements explain my opinions on this rule in detail: Best execution is important in trade execution for individual investors. At the moment we may not be able to understand the complexities involved in choosing how to execute a trade and this can not be a necessity for a fair participation in the market. Provide clear guidance on how to read and interpret the data in Regulation NMS Rule 605 reports, especially for retail investors who may not have a deep understanding of the markets. Brokers owe their customers a duty of Best Execution derived from common law agency principles and fiduciary obligations, but it needs to become a rule that the SEC can enforce. Every rule the SEC passes is only as good as the enforcement that backs it. Without the best execution rule, customers may not be aware of revenue arrangements between brokers and subpar trading firms or that they may be paying higher transaction prices. And conflicted orders don't belong in a Best Execution rule. Different trading venues may offer different prices, slower execution can lead to missed opportunities. Information leaks can inhibit a successful transaction, and less reliable settlement processes can delay receipt of proceeds. In December 2020, Robinhood was charged by the SEC with failure to satisfy its best execution obligation, resulting in an aggregate loss of $34.1 million for its customers. Robinhood made misleading statements and did not disclose payments received for routing trades to specific firms. Citadel paid the SEC $22.6 million in 2017 to settle best execution charges for executing customer trades at less favourable pricing when a better price was available. Brokers recommending mutual funds with 12b-1 fees and revenue sharing arrangements with clearing brokers have also faced best execution charges from the SEC. Quarterly reviews of execution quality would provide transparency and accountability for the broker-dealers' practices. Kind regards, Haldanus v. W.